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Red Hat Inc. has agreed to acquire Paris-based OpenStack cloud integrator eNovance. The new acquisition will help customers architect a cloud strategy, as well as set up, deploy and manage private clouds, according to the Raleigh, North Carolina-based company.

This move, coupled with other acquisitions and releases over the past few months, comes as Red Hat looks to be more of a force in the OpenStack ecosystem.

Red Hat and eNovance worked together for about a year, and after increasing their partnership last fall, it was decided the two companies would work better as one, according to Red Hat. This move also increases Red Hat's global footprint, as eNovance has a presence in India and Canada.

The deal is valued at approximately $95 million in cash and stocks.

Red Hat's OpenStack cloud strategy

To be successful in the private cloud market, vendors must have consulting skills to help IT pros transition from legacy infrastructure, according to James Staten, a vice president and senior analyst at Forrester Research Inc. in Cambridge, Massachusetts. Red Hat had been relying on channel partners to do that, without the capability or experience to train those partners.

They finally have started to generate some interest. They now need to drive adoption.

John Rymer, analyst, Forrester Research

This acquisition fills that gap for Red Hat and allows it to build direct sales relationships with customers, but the company must convince skeptical channel vendors it won't poach their business.

"It's good to see Red Hat recognize that they need these skills," Staten said. "We'll wait until we see the execution from this move before judging further."

Red Hat is going full bore on OpenStack, to the point that some are even accusing them of owning it, according to David Linthicum, senior vice president at Boston-based Cloud Technology Partners. The company has made some smart moves in the space, and "it'll work out for them," Linthicum said. "Out of all the companies in that space, they've always been the open source [company]."

Last month Red Hat began selling OpenShift 2.1, an on-premises, platform as a service offering intended to allow enterprises to move toward DevOps and deploy across different regions. Most enterprises still rely on private clouds, and this service could be a bridge to the hybrid model, according to Red Hat.

In the spring, the company open sourced its cloud management product, ManageIQ, and acquired Inktank, an open source storage company Red Hat describes as part and parcel to most OpenStack deployments. The deal was for approximately $175 million in cash.

"We see OpenStack as a core technology in the next generation of cloud-based IT infrastructure," said Tim Yeaton, senior vice president of the infrastructure business group at Red Hat. "We've been quite aggressive in direct organic investment and acquisitions, and [are] adding a robust service scale to what we do."

There has been considerable discussion about OpenStack's maturity, but the function of the open source foundation is innovating, not productizing, according to Red Hat. The company sees itself fitting in with mission-critical support, having done so for 12 years with its enterprise Linux products.

The goal for Red Hat is to capture growing momentum for hybrid cloud among enterprises. But momentum doesn't necessarily translate to market share, according to John Rymer, a Forrester analyst. Red Hat is in virtually the same place as Pivotal and the other open source, legacy IT vendors trying to get a foothold in the new cloud landscape, Rymer said.

"They finally have started to generate some interest," he said. "They now need to drive adoption."

Most analysts see this as the early days in cloud adoption for enterprises, but companies like Red Hat have to make their mark soon if they want to remain relevant, Rymer said.

Red Hat is a "tweener," meaning it's too big to get bought out and too small to truly compete with the dominant players in the market, Linthicum said. The downside to these latest efforts by Red Hat could result in butting heads with Amazon, Microsoft and Google.

"That's kind of getting to a place where you can get a stomping, not necessarily because you're bad at doing your job, but because they can stomp you," Linthicum said.

Another challenge Red Hat faces is the legacy infrastructure it sells that Google and Amazon don't have to be concerned with.

"Red Hat has to think about where they came from [to] make sure they don't alienate their existing base," Linthicum said.

The company's move from a dominant position in OS, Java application, server and middleware space to the new era of cloud and modern applications hasn't been convincing, Staten said.

"I'm not very impressed with their strategy and thus not convinced they will be one of the winners at the end of the day," Staten said. "But that doesn't mean they can't adapt their strategy further and or make further progress."

Where does Red Hat fit in the cloud market?

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